Correlation Between Sinocat Environmental and Shuhua Sports
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By analyzing existing cross correlation between Sinocat Environmental Technology and Shuhua Sports Co, you can compare the effects of market volatilities on Sinocat Environmental and Shuhua Sports and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sinocat Environmental with a short position of Shuhua Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinocat Environmental and Shuhua Sports.
Diversification Opportunities for Sinocat Environmental and Shuhua Sports
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sinocat and Shuhua is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sinocat Environmental Technolo and Shuhua Sports Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shuhua Sports and Sinocat Environmental is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sinocat Environmental Technology are associated (or correlated) with Shuhua Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shuhua Sports has no effect on the direction of Sinocat Environmental i.e., Sinocat Environmental and Shuhua Sports go up and down completely randomly.
Pair Corralation between Sinocat Environmental and Shuhua Sports
Assuming the 90 days trading horizon Sinocat Environmental is expected to generate 1.19 times less return on investment than Shuhua Sports. In addition to that, Sinocat Environmental is 1.34 times more volatile than Shuhua Sports Co. It trades about 0.04 of its total potential returns per unit of risk. Shuhua Sports Co is currently generating about 0.07 per unit of volatility. If you would invest 739.00 in Shuhua Sports Co on October 14, 2024 and sell it today you would earn a total of 82.00 from holding Shuhua Sports Co or generate 11.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinocat Environmental Technolo vs. Shuhua Sports Co
Performance |
| Timeline |
| Sinocat Environmental |
| Shuhua Sports |
Sinocat Environmental and Shuhua Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinocat Environmental and Shuhua Sports
The main advantage of trading using opposite Sinocat Environmental and Shuhua Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinocat Environmental position performs unexpectedly, Shuhua Sports can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Shuhua Sports will offset losses from the drop in Shuhua Sports' long position.The idea behind Sinocat Environmental Technology and Shuhua Sports Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Shuhua Sports vs. Sinocat Environmental Technology | Shuhua Sports vs. Elite Color Environmental | Shuhua Sports vs. Nanxing Furniture Machinery | Shuhua Sports vs. Aofu Environmental Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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